Top fund picks for 2017: Is it time to back value investing and where in the world will perform best this year?

After the turbulence of 2016, many investors will be wondering what this year could possibly have in store for them.

The fallout from last year's events are likely to take their toll on markets, as Donald Trump comes to power in the US, and the UK continues its efforts to disentangle from the EU.

At the same time, upcoming events such as the French presidential election, and a potential recovery in the oil price and rise in inflation are also likely to affect how different asset classes perform.

Looking ahead: Marine Le Pen hopes to win the French election in April

Last year, funds invested mainly in overseas assets soared as the pound slumped following the Brexit vote, while absolute return funds and smaller companies had a tougher time.

Those funds owning overseas shares were given a boost by the fall in sterling, as earnings and asset prices translated back into more pounds.

But some suggest it could be a different story this year, if small companies benefit from a still relatively robust economy and domestic investment and investors turn to asset classes that can withstand rising inflation.

While markets are impossible to predict, we have gathered the views of some investing experts who have examined all the factors and picked a selection of funds - and an investment trust - that they believe could be winners in 2017.

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Gavin Haynes, managing director of Whitechurch Securities is backing value as a style and says UK investors should gain some exposure to the US market:

JO Hambro UK Dynamic

Last year proved to be a difficult one for active fund managers trying to beat the UK stock market index.

However, one fund manager who outperformed strongly was Alex Saviddes, manager of the JOHCM UK Dynamic fund. Saviddes is building up an impressive track record, employing a clearly defined process investing across the UK stock market.

The manager adopts a value and contrarian stance of investing and I believe this style is going to be in favour this year.

Although focused on generating growth, the fund will only invest in companies that pay dividends which I like in an environment where UK interest rates will remain at low levels.

Artemis US Smaller Companies

With Donald Trump intent on implementing policies that will stimulate the US economy, I believe that investors seeking long-term growth should consider adding exposure to US smaller companies.

Not many UK investors have exposure to funds in this area, even though the US small cap market is larger than the whole European stock market.

Artemis US Smaller Companies fund manager Cormac Weldon has a very strong track record in the US and he is seeing opportunities in many US small cap sectors.

Looking East: Japan performed badly in 2016, but Haynes thinks it's the one to watch this year

MAN GLG Japan Core Alpha

Japan was the worst performing of the major developed stock markets in 2016 (in local currency terms), but this masks the fact that in recent months the market has staged a strong recovery.

Despite the recent rally, not many investors are talking about the Japanese market, but I see it as one to watch in 2017.

Stephen Harker, manager of MAN GLG Japan Core Alpha, says he is seeing some exceptional value emerging in the country. Valuations appear relatively attractive compared with other developed markets and I believe that this is a good time to add this fund to your portfolio.

Adrian Lowcock, investment director at Architas, is also looking to the US on the back of Trump's promises to boost infrastructure spending:

Schroder US Mid Cap

Should Trump’s campaign promises be realised then mid-sized US companies stand to benefit from the extra infrastructure spending. This is a US small and mid cap fund managed by a very experienced and well-resourced investment team led by veteran investor Jenny Jones.

Jones is a cautious investor and believes avoiding losses is essential for growing capital over the long-term. This approach will cause the fund to lag during strong bull-markets but over time has proved successful. The team conduct bottom-up analysis to find companies that fit into one of three categories: steady eddies, turnarounds or under-appreciated growth.

Build it and they will come: US companies will benefit from Trump's infrastructure plans

International Public Partnerships Investment Trust

Real assets such as infrastructure have built-in inflation protection, as the rental income they generate rises with inflation. However, the market has yet to fully factor this into the asset class.

International Public Partnerships is an infrastructure investment trust that buys directly into global projects - currently more than 110 - that are financially backed by the public sector.

The vehicle invests solely in projects like schools and hospitals that earn pre-determined revenue. While it does take on some construction risk, this should help drive capital and income growth. The portfolio is very diverse and offers protection against rising inflation.

Invesco Global Targeted Return

Investors should hope for the best and plan for the worst. It is better to buy protection in a portfolio when it is relatively cheap and when markets are high than after markets have fallen and you are already suffering a loss.

The Invesco Global Targeted Return fund invests in macro-economic themes with a view to delivering a positive return over three years, no matter what the global environment. The fund typically holds 20 to 30 ideas across each asset class, making it very diversified. The focus on macro-economic trends means the fund can be flexible and position to protect investors from volatile or falling markets.

I'm still a big long-term fan of emerging markets and Asia. The demographics and growth stories far outstrip the developed world. Rising oil prices aren't great for the likes of India, however, so there is a note of caution.

Value had a torrid time for several years up until recently. As a style it typically doesn’t do well in a rate-cutting environment. However, we now seem to be in a different world and therefore value as a style could well come back into vogue – it has already performed well over the past few months.

Small is beautiful: Yearsley likes Aberdeen's Asian small cap fund, which invests in Hong Kong, pictured

Aberdeen Global Asian Smaller Companies

For long-term growth I always look at smaller companies for the simple reason that they can expand more quickly than their larger counterparts, and are often more in sync with growth in the economy.

Singapore, Malaysia and Hong Kong are the countries where the Aberdeen Global Asian Smaller Companies fund has its largest current weightings while banks, real estate and retailers are its biggest sectors. Even though Asian small caps is a riskier area to invest, Aberdeen applies its usual quality criteria to help manage that risk.

The manager seeks companies with what he calls 'underappreciated change'. In the age of the fund behemoth this is a tiddler, something that could help it in the long run.

GAM Global Diversified

Run by the same manager, Andrew Green, since 1984, GAM Global Diversified is a value-based fund with defensive characteristics, something that could be useful going into 2017.

The fund typically has a contrarian style, buying into unloved areas of the market, and can also allocate a high weighting to cash.

Schroder Recovery

Managed by Kevin Murphy and Nick Kirrage for almost a decade now, the Schroder Recovery fund invests in companies that have suffered some kind of setback either in terms of profits or share prices.

The duo are looking for companies that are cheap compared to what the managers consider their 'long-term intrinsic value'. Unsurprisingly, banks feature heavily at the moment, as do retailers and commodity companies.

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